The Increasing Costs of Renting vs. Buying a House

THE INCREASING COSTS OF RENTING Vs. BUYING A HOUSE Even as the market continues to improve – sales of existing homes in May 2015 increased to their highest pace in six years, the National Association of Realtors reported, and first-timers make up 32% OF THE BUYERS - it is leaving millions of Americans unwillingly stuck in rental housing. The nation's homeownership rate 70 The nation's homeownership rate has been falling for eight years, down to 63.7% in the first quarter 60 of 2015 from a peak of over 69% in 2004, according to a report by 50 Harvard University's Joint Center for Housing Studies. 2004 2015 (Q1) YEAR HOUSEHOLDS The flip side of the decline in homeownership is a boom in rentals and a significant rise in the cost of renting. On average, the NEW RENTA. INCREACED BY 770,000 number of new rental households has increased by 770,000 annually since 2004, the center's report said, making 2004-14 the strongest 10-year stretch of rental growth since the late 1980s. ANNUALLY SINCE 2014 Owning a home costs the average American $1.459 per month or $17,500 each year. $1,459 PER MONTH OR = $17,500 PER YEAR The fair market rent for a three-bedroom property in 2015 will require an average 25/ 27% of 27% of median household income, while buying a median-priced home requires an average of 25% of median household income based on the median sales price in November. In contrast, when you rent, you have more control over your expenses. Monthly rent is predictable and you don't have to worry about paying for unexpected repairs. On the other hand, unless you are able to sign a very long lease, there are no guarantees against having to move on relatively short notice. And you have only limited control over your environment. You aren't free to make changes to suit yourself. Yet, in one respect, you have more flexibility and control when renting: You can leave a place within 12 MONTHS if it doesn't suit you. There are no transaction costs. SOURCES: nytimes.com/2015/06/24/business/economy/more-americans-are-renting-and- paying-more-as-homeownership-falls.html money-zine.com/financial-planning/buying-a-home/owning-a-home realtytrac.com/news/home-prices-and-sales/renting-less-affordable-than-buying- in-most-u-s-markets-but-not-where-millennials-are-moving-most caniretireyet.com/renting-vs-buying-true-cost-home-ownership Brought to you by: 123 LUMP SUM ***************************** www.123lumpsum.com PERCENT (%)